The Federalist No. 32

Concerning the General Power of Taxation (continued)

Independent JournalWednesday, January 2, 1788 [Alexander
Hamilton]

To the People of the State of New York:

ALTHOUGH I
am of opinion that there would be no real danger of the consequences which seem
to be apprehended to the State governments from a power in the Union to control
them in the levies of money, because I am persuaded that the sense of the
people, the extreme hazard of provoking the resentments of the State
governments, and a conviction of the utility and necessity of local
administrations for local purposes, would be a complete barrier against the
oppressive use of such a power; yet I am willing here to allow, in its full
extent, the justness of the reasoning which requires that the individual States
should possess an independent and uncontrollable authority to raise their own
revenues for the supply of their own wants. And making this concession, I affirm
that (with the sole exception of duties on imports and exports) they would,
under the plan of the convention, retain that authority in the most absolute and
unqualified sense; and that an attempt on the part of the national government to
abridge them in the exercise of it, would be a violent assumption of power,
unwarranted by any article or clause of its Constitution.

An entire consolidation of the States into one complete
national sovereignty would imply an entire subordination of the parts; and
whatever powers might remain in them, would be altogether dependent on the
general will. But as the plan of the convention aims only at a partial union or
consolidation, the State governments would clearly retain all the rights of
sovereignty which they before had, and which were not, by that act, exclusively
delegated to the United States. This exclusive delegation, or rather this
alienation, of State sovereignty, would only exist in three cases: where the
Constitution in express terms granted an exclusive authority to the Union; where
it granted in one instance an authority to the Union, and in another prohibited
the States from exercising the like authority; and where it granted an authority
to the Union, to which a similar authority in the States would be absolutely and
totally contradictory and repugnant. I use these terms to
distinguish this last case from another which might appear to resemble it, but
which would, in fact, be essentially different; I mean where the exercise of a
concurrent jurisdiction might be productive of occasional interferences in the
policy of any branch of administration, but would not imply any direct
contradiction or repugnancy in point of constitutional authority. These three
cases of exclusive jurisdiction in the federal government may be exemplified by
the following instances: The last clause but one in the eighth section of the
first article provides expressly that Congress shall exercise "exclusive
legislation" over the district to be appropriated as the seat of
government. This answers to the first case. The first clause of the same section
empowers Congress "to lay and collect taxes, duties, imposts and
excises"; and the second clause of the tenth section of the same
article declares that, "no state shall, without the consent of
Congress, lay any imposts or duties on imports or exports, except for
the purpose of executing its inspection laws." Hence would result an
exclusive power in the Union to lay duties on imports and exports, with the
particular exception mentioned; but this power is abridged by another clause,
which declares that no tax or duty shall be laid on articles exported from any
State; in consequence of which qualification, it now only extends to the duties
on imports. This answers to the second case. The third will be found in that
clause which declares that Congress shall have power "to establish an
UNIFORM RULE of naturalization throughout the United
States." This must necessarily be exclusive; because if each State had
power to prescribe a DISTINCT RULE, there could not be a
UNIFORM RULE.

A case which may perhaps be thought to resemble the
latter, but which is in fact widely different, affects the question immediately
under consideration. I mean the power of imposing taxes on all articles other
than exports and imports. This, I contend, is manifestly a concurrent and
coequal authority in the United States and in the individual States. There is
plainly no expression in the granting clause which makes that power exclusive
in the Union. There is no independent clause or sentence which prohibits the
States from exercising it. So far is this from being the case, that a plain and
conclusive argument to the contrary is to be deduced from the restraint laid
upon the States in relation to duties on imports and exports. This restriction
implies an admission that, if it were not inserted, the States would possess the
power it excludes; and it implies a further admission, that as to all other
taxes, the authority of the States remains undiminished. In any other view it
would be both unnecessary and dangerous; it would be unnecessary, because if the
grant to the Union of the power of laying such duties implied the exclusion of
the States, or even their subordination in this particular, there could be no
need of such a restriction; it would be dangerous, because the introduction of
it leads directly to the conclusion which has been mentioned, and which, if the
reasoning of the objectors be just, could not have been intended; I mean that
the States, in all cases to which the restriction did not apply, would have a
concurrent power of taxation with the Union. The restriction in question amounts
to what lawyers call a NEGATIVE PREGNANT that is, a negation
of one thing, and an affirmance of another; a negation of the authority
of the States to impose taxes on imports and exports, and an affirmance of their
authority to impose them on all other articles. It would be mere sophistry to
argue that it was meant to exclude them absolutely from the imposition
of taxes of the former kind, and to leave them at liberty to lay others subject
to the control of the national legislature. The restraining or prohibitory
clause only says, that they shall not,
without the consent of Congress, lay such duties; and if we are to
understand this in the sense last mentioned, the Constitution would then be made
to introduce a formal provision for the sake of a very absurd conclusion; which
is, that the States, with the consent of the national legislature, might
tax imports and exports; and that they might tax every other article, unless
controlled by the same body. If this was the intention, why not leave it, in
the first instance, to what is alleged to be the natural operation of the
original clause, conferring a general power of taxation upon the Union? It is
evident that this could not have been the intention, and that it will not bear a
construction of the kind.

As to a supposition of repugnancy between the power of
taxation in the States and in the Union, it cannot be supported in that sense
which would be requisite to work an exclusion of the States. It is, indeed,
possible that a tax might be laid on a particular article by a State which might
render it inexpedient that thus a further tax should be laid on the same
article by the Union; but it would not imply a constitutional inability to
impose a further tax. The quantity of the imposition, the expediency or
inexpediency of an increase on either side, would be mutually questions of
prudence; but there would be involved no direct contradiction of power. The
particular policy of the national and of the State systems of finance might now
and then not exactly coincide, and might require reciprocal forbearances. It is
not, however a mere possibility of inconvenience in the exercise of powers, but
an immediate constitutional repugnancy that can by implication alienate and
extinguish a pre-existing right of sovereignty.

The necessity of a concurrent jurisdiction in certain
cases results from the division of the sovereign power; and the rule that all
authorities, of which the States are not explicitly divested in favor of the
Union, remain with them in full vigor, is not a theoretical consequence of that
division, but is clearly admitted by the whole tenor of the instrument which
contains the articles of the proposed Constitution. We there find that,
notwithstanding the affirmative grants of general authorities, there has been
the most pointed care in those cases where it was deemed improper that the like
authorities should reside in the States, to insert negative clauses prohibiting
the exercise of them by the States. The tenth section of the first article
consists altogether of such provisions. This circumstance is a clear indication
of the sense of the convention, and furnishes a rule of interpretation out of
the body of the act, which justifies the position I have advanced and refutes
every hypothesis to the contrary.